101 common money myths
If you believe that carrying a balance is good for your credit score or that bankruptcy will eliminate student loans, keep reading.
What if much of what you think you know is wrong?
Just because a belief is widespread and pervasive doesn’t mean that it’s true. If you read or hear something about personal finance or money, take a few moments to think it through. Do some independent research to see if there could be another side to the coin. And never let a financial myth stand in the way of achieving your financial goals. The only way one of these money myths can stop you is if you believe it.
I assembled some pervasive money myths after listening to unsuccessful people over the years. This is a big list, but I’ll bet you have a few you could add to it. Which of these have you heard?
- I don’t need to start a business or ask for a raise. I’ll just wind up paying more in taxes anyway.
- Saving 10% of my income is plenty to carry me to financial freedom in my retirement.
- There is a magic bullet out there somewhere that will make me rich. I just need to find it.
- All credit cards are alike.
- Budgeting is for nerds. I don’t need to waste my time.
- A few late payments on my credit card won’t hurt my credit score.
- A few bounced checks won’t hurt me either. The bank knows I’m good for it!
- An emergency fund is for someone who always lives in fear.
- I don’t want anything expensive, so I don’t need a savings account.
- I’m debt-free so I don’t have to worry about managing my money or budgeting.
- More money will make me happy.
- I’m renting out my home while I’m living in another city, but I don’t need to tell my homeowners insurance company.
- I can’t switch checking accounts because I’m using overdraft protection.
- I can eat out at restaurants as cheaply as I can prepare meals at home.
- The more credit cards I apply for, the better.
- I don’t need a will because my spouse and I own everything jointly.
- My home equity is my retirement plan.
- I don’t make enough money to save.
- Going to a private college is always worth the cost.
- Individual stocks are the best investment for the long run.
- I can time my stock buys and sells to take advantage of trends in the market.
- No one can pick stocks effectively.
- Renting a home is like throwing money away.
- My work is just a job and all I need to do is enough to not get fired.
- All loaded mutual funds are bad and any no-load fund is better.
- I don’t need to understand how an ETF makes money. I just need to know that it does.
- All mortgage companies have the same rates and fees.
- Real estate agents really understand the ins and outs of personal finance.
- I’m not very good at math, so I can’t manage my own money.
- I always get a raise and a bonus every year so I don’t need to worry about setting up a budget.
- Being happy is a direct result of being able to buy whatever I want.
- Money is the source of all evil, and trying to make more money is a bad thing.
- It’s a fantasy to imagine that someone would pay me to do what I love.
- With today’s low interest rates, I’m better off keeping my money under a mattress than in a savings account.
- I can make extra money anytime I want.
- Making extra cash by using the Internet is easy.
- You always get what you pay for.
- The U.S. income tax is illegal and voluntary according to their own charter.
- One of the major advantages of home ownership is the ability to deduct your mortgage interest on your income taxes.
- Real estate investing is the answer to all my financial problems.
- Late-night television infomercials have great ideas for making more money.
- Don’t worry about the fine print. Credit issuers won’t put anything nefarious in the contract.
- Bad credit won’t stop me from getting a great job.
- Bad credit won’t stop me from renting my dream apartment either.
- Unemployment benefits will keep me afloat for six months or more.
- I shouldn’t deprive myself of anything.
- It’s too late to do anything about college financial aid.
- Money is scarce.
- Paying all bills online is always cheaper.
- If I decide to walk away from my home, the mortgage company won’t care because they get to sell the home and keep the profit.
- I’m too old to start saving now.
- I’m too young to save just yet.
- I’m middle-aged and still trying to get established so I don’t need to save either.
- I don’t need to worry about protecting my identity.
- Term life insurance is always the best bet.
- I’m too young to waste money on life insurance.
- I don’t need any life insurance because no one is dependent on my income.
- No matter how much I have on deposit at the bank, I’m protected by the FDIC.
- A debt consolidation loan is the answer to my problems.
- I can declare bankruptcy on my student loans and get rid of them forever.
- Bad credit will follow me for the rest of my life.
- All credit cards come with automatic travel insurance.
- Life insurance is voided in cases of suicide.
- Only the rich pay higher taxes.
- Stockbrokers are required to have my best interests at heart.
- When the market hits the skids, it’s time to sell everything.
- A 401k is always the best way for me to save for retirement.
- I don’t have the time to develop a side income.
- I’m smart enough to handle all financial matters on my own.
- I can’t find a job that I really want.
- Whatever it is, it won’t happen to me.
- It’s useless to save money for college because my kids will be less eligible for financial aid if I do.
- Once you hit your salary goal, you’ll be satisfied.
- I can change my phone number and get those debt collectors off my back.
- Using credit counseling will hurt my credit.
- If something is on sale, it makes sense to buy it just in case you need it later.
- Actively traded mutual funds outperform index funds.
- To retire, you’ll need 80% of your current income.
- Retirement means kicking back and relaxing all the time.
- I shouldn’t worry about paying off my mortgage early.
- I can’t do anything to positively affect my credit report.
- Young people don’t have credit scores.
- A bigger home is a sign of success.
- You can get full Social Security benefits at age 65.
- Money experts are skillful with numbers.
- When layoffs are coming at work, it’s best to stay under the radar.
- My credit score will improve if I always carry a balance.
- I need a large sum of money to start investing.
- The government will take care of my mortgage if I have problems paying it.
- Borrowing funds to invest (using other people’s money) is a sure-fire way to make a fortune.
- I make rational, reasoned decisions when I spend money.
- A stack of credit cards could be used to successfully fund a new business.
- I should buy gold!
- There aren’t any really creative ways for me to save money.
- Minimum payments on my credit cards are OK.
- I can’t increase my value at work.
- I don’t need any particular strategy when paying off debt.
- I need someone else to help clear up my credit.
- My job is secure.
- I’m too old to buy life insurance.
- There’s nothing money can’t buy.
Related reading at The Wisdom Journal:
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ABOUT SMART SPENDING
Editor Bev O'Shea lives and works in the foothills of the Appalachians. A former copy editor for The Atlanta Journal-Constitution and the Orlando Sentinel, she joined MSN Money in 2007. She's a fan of sunsets, college football and free shipping, among other things.
Having worked as a writer, reporter and editor for more than 25 years, Editor Julie Tilsner is the sort of person who can't help but correct grammar in Facebook postings and on billboards. She's written for BusinessWeek, the Los Angeles Times, Parenting, Redbook, AOL and others. She lives in Los Angeles County with her family and loves to drink wine and practice yoga, although not generally at the same time.
A writer for MSN Money since January 2007, Donna Freedman won regional and national prizes during an 18-year newspaper career and earned a college degree in midlife without taking out student loans. She also writes about smart money tactics for magazines and on her own site, Surviving and Thriving.
Mitch Lipka has been warning people about scams and shining light on questionable business practices for more than 20 years. Mitch, the consumer columnist for The Boston Globe, has also been a reporter and editor at The Philadelphia Inquirer, Consumer Reports, South Florida Sun-Sentinel and AOL. He won the 2010 New York Press Club award for best consumer reporting online and was honored in 2011 for his reporting on child product safety.
Marilyn Lewis is an award-winning writer with a passion for getting readers clear, straight information that helps them stay out of financial trouble. A former reporter for The San Jose Mercury News, she works from her home in Port Townsend, Wash. Contact her at MarilynLewis@Outlook.com.
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